Helen Nugent

More Brexit fallout, personal finances and debt worries

Despite the Chancellor’s efforts yesterday to calm the markets and soothe business fears, the pound hit a 31-year low against the dollar. There was more bad news when the UK lost its top AAA credit rating from S&P. The ratings agency said the the referendum result could lead to ‘a deterioration of the UK’s economic performance, including its large financial services sector’. Rival agency Fitch lowered its rating from AA+ to AA, forecasting an ‘abrupt slowdown’ in growth in the short term. However, the outlook this morning is slightly brighter. The FTSE 100 share index has opened higher (although it is still some way off recovering its Brexit losses) and the pound is showing signs of recovery. And the Brexit stampede to safety meant that the Government’s cost of borrowing for 10 years fell below 1 per cent yesterday for the first time ever. The Evening Standard reported that the return on UK 10-year gilts sank to a low of just 0.975 per cent as bond traders bet that the Bank of England will be forced to cut interest rates and weigh into the market again to expand its £375 billion money-printing programme. Personal finances There’s a helpful guide to changes to your personal finances following the Brexit vote on the BBC website. These include holiday money – for every £100 exchanged by UK holidaymakers, they are receiving the equivalent of £9 less in euros or £12 less in US dollars now than they did before the vote – and retirement income (annuity rates have been falling since the beginning of the year and, according to Tom McPhail, head of retirement policy at Hargreaves Lansdown, ‘the events of the past couple of days have given new momentum to that trend’). The BBC also highlights the volatility in the markets which means some investors may have seen the value of their portfolios fall, and publishes a warning from the Petrol Retailers Association and the AA: both say that a 2p to 3p increase in the cost of a litre of fuel should be expected by the end of the week. Pensions Brexit will be a trigger for more people to move their British pensions out of the UK. That’s according to the chief executive of one of the world’s largest independent financial advisory organisations. Nigel Green of deVere Group said: ‘Brexit will be a trigger for even more people to move their British pensions out of the UK. As the reality of what a Leave result in the EU referendum means for personal finances sinks in, people will now be reassessing their retirement planning strategy. We can fully expect demand for HMRC-recognised overseas pension transfers to be further boosted thanks to the UK’s decision to leave the European Union. ‘Due to the huge amount of uncertainty that’s created, more and more people who are eligible to do so – that’s to say expats and those who are considering retiring outside Britain – will be seeking to safeguard their retirement funds by transferring them into a secure, regulated, English-speaking jurisdiction outside the UK.’ Housing

Home improvement marketplace Plentific.com has released its latest homeowner research statistics on the back of last week’s Brexit victory. The Plentific research, carried out by Opinium, surveyed 1,063 homeowners across the UK to gauge their feelings following the decision to exit Europe.

The statistics show that 10 per cent of homeowners are now more likely to improve their home than sell it in the current market. This ‘wait-and-see’ approach following Brexit may continue into the near future as the survey also revealed that 12 per cent of homeowners (around 1.7 million) are now less likely to sell in the next 3 years. Holidays

The number of Brits taking holidays to Europe could drop this summer as a result of the UK’s vote to leave the European Union. A poll of more than 6,000 UK adults conducted by comparethemarket.com found that more than one in ten are less likely to book a holiday to Europe, which equates to roughly six million people.

Gemma Sonfield, head of travel at comparethemarket.com, said: ‘Now that the British people have voted to leave, and the pound has depreciated, it appears that there is little appetite to book a last minute holiday to the continent. Our research suggests that the number of UK holidays to Europe could fall significantly as a result of the outcome of the Referendum, with over one in ten UK adults saying that they would now be less likely to book a holiday to Europe. If this is the case, that may be more than six million people from the UK avoiding the beaches of the Mediterranean and possibly opting for a staycation instead.’

Mortgages Cash rebates were once a great way for providers to stand out in the highly competitive mortgage market. However, research from Moneyfacts.co.uk shows that these deals have begun to fall from favour, resulting in the number of available deals dropping by a staggering 280 in just one year. Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: ‘The research findings are disappointing, particularly given the high level of competition that currently exists in the mortgage market. In the past, incentive packages with a cashback offer enabled borrowers with limited budgets to ease the upfront costs of securing a mortgage, but anyone looking for this ‘freebie’ today would struggle, as not only is the number of deals in decline but the average size of the rebate has also fallen.’ Debt

With the credit card reaching its 50th anniversary this week, new insight from MoneySuperMarket reveals over a third of Brits have been saddled with this debt for up to ten years. This equates to 19 million people who have been reliant on plastic for up to a decade.

The analysis found as many as seven in ten UK adults currently own a credit card, with 35 per cent having more than one. Credit card holders have owned a card for an average length of 16 years. Three fifths of credit card holders currently owe money on it, with the average amount being £891, increasing to £1,215 for 18 to 34-year-olds. On average, this debt has been sitting there for over two years rising to 37 months among 35 to 54-year-olds. Overall almost two fifths of UK credit card holders do not clear their balance in full at the end of each month, with just 28 per cent managing to pay off more than the minimum amount required, and eight per cent paying off just the minimum amount. A further two per cent struggle to or can never afford to pay off the minimum amount each month.

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